Marketing, Red Bull Essay
Trends/Issues Red Bull is an energy drink aimed at students and athletes. No one thought that a “functional drink” sold at a premium price and packaged in a can would ever be successful, when the idea first came up in 1987 (www. redbull. co. uk 13. 05. 2009), however the product became quite popular amongst young people and frequently drank at night clubs as a ‘mixer’ (mixed with other drinks, e. g. vodka and whisky). The company’s marketing was also quite successful and the ‘buzz’ that the high level of caffeine in Red Bull seemed to give people went well with the slogan “gives you wings”.
This also fit well with the long lasting parties that became so popular in the 90’s (raves), since people seemed to last longer with energy drinks. Red Bull, has its image associated to two quite different lifestyles; firstly the nightlife, young people and alcohol (direct or indirectly) and to sports, through the sponsoring of athletes, which is something they started to do probably to balance out the negative associations that go hand in hand with being a ‘night drink’. Moreover, Red Bull had issues when associations of their product to ‘risky behaviour’ began to show up.
Research showed that people consuming energy drinks on a regular basis were more prone to acting irresponsibly (since the use of energy drinks tends to make people feel less drunk than they might actually be), such as drunk driving or having unsafe sex, and many of them were reported to have heart palpitations and shortness of breath (www. terra. com. br 13. 05. 2009). Moreover, some people were described to being actually drunk with caffeine; so students for example, were only awake when under the influence of the drink, and they suddenly became very sleepy when the effect passed.
Trying to reach a balance between these two extremes is probably one of the main problems that Red Bull and its competitors face. Nonetheless, even though they seem to be under some sort of pressure from parts of society due to the potential harm they might cause to people consuming Red Bull, it still seems to be a quite popular drink. External Environment – PEST • Political: Red Bull is a product that probably does not get directly involved with political issues, but one thing that can affect it indirectly, as it happens to many companies nowadays, is environmental issues.
Red Bull cans are made out of aluminium, a recyclable material, which is good and helps to please environmentalist pressure groups and stakeholders in general. However, this is something that Red Bull could maybe improve, especially considering that they sponsor athletes who are in direct contact with nature, and it is something that could help improve their image. • Economical: Red Bull is an energy drink and therefore not a product of primary need. This means that if marketing is not good enough and people are not reminded often of the drink or addicted to it in a way, sales can be affected.
This is especially true considered the fact that it is a premium priced product and that we are currently in an economically unfavourable environment, even though Red Bull’s target market might be less impacted by the credit crunch and be less price sensitive than other consumers. • Social: Red Bull sponsors some athletes in extreme sports, which probably helps it to strengthen its young and daring image, and also sponsors some parties, musical and other nightlife events, which is where most of their drinks are usually consumed.
They probably have to be careful to find a balance between the two things, the image of a drink which is only consumed at night and that can be associated with not such a healthy lifestyle and with the more healthy and positive image associated to athletes. • Technological: This is something that can relate to environmental issues, if Red Bull decided to ‘go greener’. Some R&D could go into reducing the company’s gas emission when producing its product, which is also something that could help the company improve its image and prevent it from being taken as just a party drink associated with an unhealthy lifestyle.
Porter’s 5 forces • Supplier Power: Suppliers are relatively powerful, considering that there are not that many main ingredients in Red Bull, so they can be considered to be concentrated, and the possibility of forward integration exists, even though it is not too likely. • Barriers to Entry: There are not that many barriers to entry, which is probably why so many similar products appeared as soon as Red Bull became a success.
The main issues are branding, economies of scale, starting capital, gaining enough market share to survive, since Red Bull has 70% of the market, and initially, maybe, distribution (because buyers have already so many options). • Threat of Substitutes: There are many similar products to Red Bull in the market, many of them even with the same packaging. Red Bull is premium priced, so there are cheaper choices available, which might be threatening in economically unfavourable times, even if they aim at higher income people. Buyer Power: Buyers are probably the people with most people power over Red Bull, because since there are various substitutes and at a cheaper price, if Red Bull does not come to an agreement with buyers, then they might lose share to a cheaper brand, especially because when people are in clubs and have no other energy drink option, they will probably drink whatever there is. • Degree of Rivalry: The rivalry is something that grew quite quickly in this market as it proved to have more potential than people initially thought and more and more competitors appeared in the shape of copycat brands.
The problem is that this happened without much product differentiation, which makes competition worse, since it is based more on marketing and brand identity. The slight difference in price between some brands also is what differentiates some brands from Red Bull, but it does not seem to alleviate the competition. However, Red Bull seems to deal well with competition, taking its vast advantage in the market compared to other brands. Organisation internally – SWOT • Strengths: Red Bull was a pioneer in a new market, which probably gives it credibility in consumers’ minds, since it was the first brand to establish itself.
This probably gives it an advantage over other brands which just copied the idea of the product. • Weaknesses: Red Bull is a simple product whose idea was quite easy to be copied by competitors, it therefore seems to rely quite heavily on marketing and branding alone. There does not seem to be a real product differentiation, even though they claim to be “often copied, never equalled” (www. redbull. com 13. 05. 2009) • Opportunities: Since Red Bull is now a strong and consolidated brand, it should explore its well recognised name and reputation for good product.
They have begun to do this by introducing the Red Bull Cola, and maybe they can go further by doing other types of drinks that suit their image and their target audience, in other words, diversify and extend their product line. • Threats: Since Red Bull relies so heavily on marketing to differentiate its product, it must be careful with all the competitors and copycat products which might find a way of improving the original idea of the drink or find a better marketing campaign and affect Red Bull’s sales.
• http://www. quickmba. om/strategy/porter. shtml • www. redbull. co. uk • A Truly Global Brand (Red Bull homepage – date and author not available) http://www. redbull. co. uk/#page=CompanyPage. AsTimeGoesBy • A New Market ( Red Bull homepage – date and author not available) http://www. redbull. co. uk/#page=CompanyPage. AsTimeGoesBy • Energeticos sao ligados a comportamento de risco entre jovens (Energy drinks are linked to risky behaviour amongst young people) by Paulo Migliacci (29. 05. 2008) http://noticias. terra. com. br/ciencia/interna/0,,OI2915513-EI8147,00. html